USD Continues Lower
The US Dollar is turning lower again today, extending losses seen yesterday in response to weaker-than-forecast US ISM services data. On the back of Friday’s downside NFP shock, yesterday’s data is further endorsing the view that the Fed will cut rates next month with markets already pricing in at least one further cut head of year end. This dovish shift in Fed expectations is starting to weigh on USD more now opening the way for a deeper move lower in response to any fresh data downside.
US Data & Fed Speak
Looking ahead, weekly unemployment claims later today could add to bearish sentiment if the expected rise is confirmed. We also have more Fed speakers to monitor today. Yesterday, Fed’s Daly, Cook and Kashkari each voiced their concerns over weakness in the jobs market with Cook opining that she feels risks are skewed towards more than two cuts this year. Any further dovishness from Fed members should keep USD pressured lower near-term.
Russia/Ukraine Peace Hopes
Alongside the dovish shift in Fed expectations, USD is also lower today amidst optimism over Russia-Ukraine peace talks. Trump is reportedly arranging meetings with Zelensky and Putin next week, while Zelensky prepares to meet EU leaders later today, and has signalled great progress with Russia. If any sort of ceasefire or truce is announced this should be firmly bullish for risk sentiment, leading USD lower near-term.
Technical Views
DXY
The index is now testing support at the 98 level with the bull channel lows sitting just below. This is a key support area for the market and can be seen as the potential right shoulder of an inverse head and shoulders pattern. As such, a break lower here will be firmly bearish, putting focus on 96.89 next and 94.85 beyond as the deeper bear target.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.